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DSG International, the pan-European electrical goods retailer which owns Currys and PC World, issued a surprise profits warning on the back of dire Christmas sales, sending its shares down more than 22 per cent and putting pressure on other British retailers.
Shares of DSG tumbled 22.3 per cent, or 24.25 to 83p in early trading after Europe's largest electricals retailer said it expected full year profits before tax to be about £40 million to £50 million lower than current analyst expectations.
Analysts had been expecting DSG to post a pre-tax profit of between £300million and £320 million in the year to end-April.
In the year to April 2007, the group made £300 million, but at the half way stage in October, it reported a 25.4 per cent slump in underlying pre-tax profits to £52.4 million.
DSG said that like-for-like sales in the 11 weeks to December 29 were down 1 per cent, as sales of computer goods tumbled 11 per cent, particularly in the UK and consumer demand for electrical goods, mostly in Italy and Spain, dried up.
The news sent shares of other British retailers lower. Home improvements group Kingfisher was down 3 percent, Kesa Electricals fell over 3 percent and general stores group Home Retail was down 6 percent.
Britain’s retailers are struggling as cash-strapped consumers reduce their spending following a series of interest rate rises and amid rising fuel costs, a slowing housing market and the pressures of the global credit crunch.
The news came as Next, the high street retailer, gave a gloomy forecast for 2008 as it reported flat sales for the six months to December 24.
DSG Finance Director Kevin O’Byrne said: "Overall trading has clearly been very disappointing and reflects a slowdown in consumer expenditure."
He told reporters on a conference call that a reduction in UK interest rates would help and send the right message to consumers.
He said: "I think that’s what a lot of people are expecting.”
The weak performance will put pressure on John Browett, DSG's new chief executive who joined the group from Tesco.com just three weeks before Christmas.
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shopped over 25yrs happy with service.Many sales staff on minimum wage have to have product knowledge,sell and book orders,process credit, repairs ,shelf fill ,ticket, meet targets.I'm glad I'm retired if I wasn't I sooner scan items at supermarket cash desk and they get paid more!
daisy, kent,
I went to the Tunbridge wells Store and was amazed at the degree of technical support I was given and for free.And I brought a sony at a very competative pricesay what you will perhaps I was a lucky one but I will deal with them again .Welldoe to them I hope tht they get over this hard time they are having
Brian Jacquin, Tunbridge wells, kent
If the staff aren't rewarded, the motivation drops....A minimum wage will draw in inexperienced staff with low motivation. This could be an issue for DSGI. Targets are not just too high but nearly impossible. I know that employee work hard to provide a decent service, but they are hounded to perform which then detracts from the level of service they can offer. High performers are as important as technically minded individual and those that like to spend time with customer to help them choose the correct items, it's a package!!!! If DSGI can create an across the board high quality package within all departments from the sales floor to the delivery and distribution centres and especially throught to the product support centres which deal with repairs and replacements, then and only then will they have a world class service. It's about quality, not quantity and that is what will draw customers back. They demand an exceptional service and thats what they need to cross the thresholds!!!
sarah, bath, uk
I have had nothing but superb service at PCWorld stores, and any member of my family will say the same..we had next to no product knowledge and were sold the full pc package to enable us to use our pc and laptops with all software needed and they are great... fantastic when bought with offers and 3 for 2 kept cost down too!! Great work Pcworld keep it up!!
Stacey, Warrington, UK
I am absolutly feed up trying to buy at PCWorld, all they ever want to do is sell warranty extension, which i might add run even in the first year when your covered anyway.
This is one of the first question's your asked, if you say no the assistants loss interest in you thats if you can find one in the first place.
Paul, west byfleet,
I never buy anything in Currys. I go elsewhere. I've tried a few times to shop in Currys but the staff are hopeless and the customer service experience in the past is just awful. Best avoided. Same in PCworld. On the other hand Comet have been so good lately and the stores look better i even wrote to the store to tell them how good my experience was of making a purchase there.
Steven Bradley, Cleethorpes, UK
DSG owns a number of chains that I feel so negatively about that I won't darken their doorstep. I've tried being a customer, but they irritate me too much. I didn't even realise that DSG was the common link until recently.
To own one poor brand would be just one of those things, but to own several of the worst examples to be found in the UK demonstrates where the problem really originates from.
Any company that treats it's customers badly deserves what happens when those customers go elsewhere.
Pinning your hopes on on-line selling is even more fragile. With bricks & mortar stores, we only have a limited choices, depending on where we live. When buying on-line, we can use any dealer and tend to favour the ones with the best service.
Alan, Newbury,
The fact that the city analysts are surprised at the DSG news shows how out of touch some of the City is with reality. The only possible reason for going into a pcworld or dixons/currys is if you have to get whatever you are buying there and then. Generally anything on sale there can be bought cheaper and with a more pleasant retail experience elsewhere.
Dave, Reading, UK
£250 million is still a lot of money, no?
Peter Meh, Amsterdam,
i called PC world to ask if they would be stocking the most sought-after tech item this christmas: the Asus EEE PC. They had never heard of it. What hope do they have?
simon b, london, uk
DSGi s Internet Businesses (Dixons & Pixmania) are competitive but it was a mistake to use the jaded Dixons brand and untill recently the performance of the Dixons site was poor . The High Street shops must struggle with retail rents. Some of the older out of town stores are looking shabby and have not been properly re-fitted. There are inadequate knowledgeable staff in place at many shops and if you pay peanuts you get monkeys so customer care is not as strong as it needs to be. The PC World format is glossy and stores look good but as the consumer becomes more comfortable with on line purchasing of IT and prices continue down with wafer thin margins on some core stuff like laptops (where they are now a casual purchase at Tesco) the PCW format looks vulnerable, especially where they are in the same block as a large Currys. Perhaps some PCW & Currys should be merged? It looks as though in some areas PCW are trying to compete in cut throat fashion on flat TVs with Currys-just silly
David Raynes, Bath, Uk
So the fact that Currys' staff seemingly have zero product knowledge and that PC World don't seem to sell a single pc/laptop without Vista already bundled in , has nothing to do with it ?
Benzo, Nr Chelmsford,
Yes, all true, I bought a laptop 2yrs ago, and against all my better judgement added insurance at the time of purchase, the selling point that got me was a "free health check" after 1 year. Guess what?, they couldnot debug my machine and the non recharging battery was a catch22.
joe, Bourne, UK
I wish the economists would make their minds up. Last year we were all irresponsible spenders with too much debt, now we're being blamed for saving our money and reducing the profits of poor old big business.
Personally I think it's a good thing people are spending less- hopefully the general public are getting better at keeping within their means...
Carla, Bucks, UK
Not surprising.
It's like a double glazing outfit with poor service and acned white-shirted salesmen physically pushing past customers.
When they do sell they want to add on the expensive extended -guarantee service contracts.
It summarises a lot of what is wrong about our country and why customers go elsewhere.
If you want decent service and prices go to John Lewis.
(We've been customers for well over a decade.)
K Urban, London, UK
PC Worlds poor showing is unsurprising given that they are the most technically inept sales people coupled with the most expensive shop in the UK. You can get virtually everywhere (but especially online) the same products at substantially less.
Really only the techno dweebs and the lazy shop at PC World.
Currys is the same story. When they can be bothered to serve you. It's staff who don't know their products coupled with top drawer prices.
I hope (at last) the Great British public have had enough of being ripped off in this country and is beginning to fight back.
If DSG fold I shan't be over bothered.
Ethan, nr Dole Farm, UK
They just dont't get it do they? It's not just about buying a PC its's about good service and aftercare. PC World are lousy at both, and have been for years. It was inevitable that eventually their profits would fall.
sophie, london,
Re DSG. Perhaps the old model of high price, high margin, enormous super-glossy out of town warehouses for electrical goods has finally broken down in favour of low price internet operations? People are under pressure financially and DSG-type operations offer little that cannot be obtained for much less money in 10 minutes at the home PC.
Colin , Shrewsbury,